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Stocks ended lower on this first trading day of the third quarter as a barrel of negative news from the biotech sector weighed heavily on the market. The major indices all came out of their short countertrend rallies in a big way today as the Dow and S&P dropped 1.44% and 2.13% respectively. The Dow was helped out by a positive pre-announcement from 3M (MMM | Quote | Chart | News | PowerRating). Meanwhile, the Nasdaq ($COMPX | Quote | Chart | News | PowerRating) was the weakest index as it dropped over 4% on very heavy volume of over 3.3 billion shares.
Internet ($DOT.X | Quote | Chart | News | PowerRating), biotechs ($BTK.X | Quote | Chart | News | PowerRating), airline ($XAL.X | Quote | Chart | News | PowerRating), and hardware ($GHA.X | Quote | Chart | News | PowerRating) all sold off heavily today. Today's only winners were gold ($XAU.X | Quote | Chart | News | PowerRating) and homebuilders. On the economic front, the manufacturing sector continued to grow for the fifth straight month. The ISM index increased to 56.2% from May's reading of 55.7%. However, construction fell 0.7% in May. Gold gained over 4%. For more information on today's action, please refer to the market recap.
Volatility made a turnaround today after heading lower for the last three sessions. The VIX ($VIX.X | Quote | Chart | News | PowerRating) opened near its lows and closed near the highs of the day. This shift in intraday sentiment again shows fear rising. Once again, no CVR signals were triggered today. Despite the heavy sell-ff in the techs, the VXN ended slightly lower today. The VXN ($VXN.X | Quote | Chart | News | PowerRating) opened near the midpoint of its range and closed slightly below its open. This shift in intraday sentiment shows a small drop in fear. No CVR signals were triggered by the VXN either.
Points of Significance:
Amazon.com (AMZN | Quote | Chart | News | PowerRating) dropped over 16% on almost double its average volume. This came after a New York Times article reported that the E-tailing giant will open an online apparel store. Shares of Amazon have already taken out an intermediate term trendline last week.
Computer Sciences (CSC | Quote | Chart | News | PowerRating) dropped 12.80% today on more than double its average volume. The shares were under selling pressure today as a negative Wall Street Journal article hinted at possible accounting woes with their outsourcing contracts. The shares are starting to break down from a head-and-shoulders pattern.
Enzon (ENZN | Quote | Chart | News | PowerRating) dropped 10% and fell to a two-year low. The company announced today that they've reacquired the rights to market and distribute an anti-leukemia drug.
| Volatility Index | Close | Net Change | Signals/Direction | % Above/Below 10 Day Moving Average | Significance |
| VIX | 30.56 | UP 1.43 | NONE | 0.004 % Above | Not At Extreme |
| VXN | 57.45 | DOWN .50 | NONE | 2.33 % Below | Not At Extreme |
Abnormal Options Volume With Price Movement -- Abnormal options volume (calls and puts) with stock price movement
| Name | Symbol | Net % Change | Volume | Avg. Volume |
| Electronic Data Systems | EDS | - 18.03 | 41148 | 6651 |
| Amazon.com | AMZN | - 16.61 | 9795 | 2659 |
| Freemarkets | FMKT | - 13.87 | 3584 | 379 |
| Computer Sciences | CSC | - 12.80 | 4023 | 196 |
| Overture | OVER | - 8.40 | 543 | 238 |
| Enzon | ENZN | - 12.22 | 1662 | 404 |
Stocks With Biggest Spikes in Implied Volatility -- Stocks with biggest increases or decreases in implied volatility compared to previous day
Spike Up
| Name | Symbol | IV | Previous IV | High IV | Low IV |
| Advent Software | ADVS | 137.1 | 67.4 | 70.3 | 46.2 |
| Websense | WBSN | 108 | 79.3 | 82 | 64.6 |
| Reckson Associates | RA | 25.8 | 20 | 31.9 | 16.4 |
| DST Systems | DST | 47.1 | 37.3 | 38.1 | 24.5 |
| Qwest Diagnostics | DGX | 45.1 | 35.8 | 40.6 | 25.1 |
| Petroleo Brasileiro | PBR | 63.3 | 51.4 | 53.3 | 35.6 |
Spike Down
| Name | Symbol | IV | Previous IV | High IV | Low IV |
| PennzEnergy | PZL | 13.9 | 17.6 | 43.2 | 14.8 |
| Hershey | HSY | 16.6 | 19.6 | 20.7 | 16.1 |
| Progress Energy | PGN | 18.4 | 21.5 | 27.1 | 11.8 |
| BARRA | BARZ | 40.7 | 47.3 | 48.2 | 26.8 |
| Donnelley & Sons | DNY | 21.9 | 25.1 | 29.2 | 20.6 |
| Wrigley Jr. | WWY | 112.4 | 127.8 | 150.9 | 39.1 |
Please use stops on every trade!
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